Introducing the U.S. Biopharmaceutical Industry

May 14, 2020

Image courtesy of Ajinomoto Bio-Pharma Services

Analogous to the beginning of the previous decade, when the US faced fears over the spread of H1N1 swine flu, and was tenuously pulling itself out of a perilous financial meltdown, 2020 has brought with it a similarly calamitous series of events. This time triggered by the novel respiratory virus labeled COVID-19. The disease invaded the human population at the dawn of the new decade, and has spread rapidly and indiscriminately across borders, aided by the interconnectedness of the modern world. Daily life has been upended across the globe and the spread has deeply shaken financial markets and, most importantly, many lives have been lost.

As extreme measures are taken to lock down populations to a degree that was previously unimaginable, commerce has ground to a halt. The immediate cause of the turbulence in markets can be attributed to the actual and feared impact of the coronavirus in destroying supply and demand simultaneously. This has undermined the momentum of global economic growth to such an extent that, five weeks after reaching new all time highs in the S&P 500, the US government committed to spending trillions to keep individuals and corporations solvent. Now, as much as ever, the world is in desperate need of a solution. First to deprive the disease of its ability to spread, second to develop a therapeutic that can cure those who are infected, and finally to invent a vaccine so this disaster does not reoccur. The latter two are exactly the type of challenges upon which the American biopharmaceutical industry thrives.

The US undoubtedly is the world leader in bringing innovative therapeutics to market, and novel technologies currently being developed and commercialized are at record levels. An effective response to the coronavirus pandemic requires unprecedented collaboration across academia, the private sector, and the philanthropic community. These are all areas in which the country excels. America, and in particular its leading clusters on the east coast, has a university system that is the envy of the world, as well as tech transfer, large pharma, fast growing biotech, important corporate partnerships, a well functioning incubator system, and an abundance of talent, skills and know-how regarding discovery, clinical trials and commercialization. These qualities, along with access to liquid and efficient capital markets, power the engine of the US biopharma industry. Christiana Goh Bardon, portfolio manager of the Burrage Capital Fund, commented: “If we do not support innovation, who is going to develop the drugs to fight coronavirus? Who is going to develop the diagnostics? Who is going to invent the vaccine for preventing the disease in the future? That all comes from the biotechnology industry. If anything, this scare has reminded us how important what we do is fundamentally.”

For biopharma, the past decade was a transformational one, wherein immense progress and exceptional growth were achieved. We now live in a world where a heart attack is something that you can bounce back from, where diabetes is something that patients live with every day and HIV is essentially a chronic condition. Prior to the COVID-19 pandemic, the Nasdaq Biotech index had expanded roughly 400% decade on decade. Driven by enthusiasm over the promise of cures for all sorts of diseases, investment flowed into the sector. As evidence of this ebullient era, venture capital funding into US-based biotech firms has been above a record-setting US$3.5 billion for each of the last eight quarters leading into 2020, according to Pitchbook data. It wasn’t that long ago that an entire year’s worth of venture funding was in the US$4 billion to US$5 billion range.

The US biopharmaceutical industry produces 57% of all the trigger new drugs in the world and, in 2019, the U.S. FDA approved 48 novel drugs, several of which represent advanced, first-in-class therapies with billion-dollar blockbuster potential.  This built off of a strong 2018, that saw a record 59 novel treatments. A big spike compared to 2010, when just 21 novel drugs were approved. 

These novel drugs seek to treat and cure conditions ranging from cancers to muscular dystrophy to schizophrenia. One example is Vertex Pharmaceuticals’ FDA approval for Trikafta, a cystic fibrosis (CF) treatment with the potential to help 90% of patients with the deadly genetic disorder.  According to Robert Coughlin, president of MassBio and father to a CF patient: “This is another reminder of just how difficult it is to bring a drug to market, as it took 18 years and billions of dollars to finally develop a drug that worked for my son and thousands like him. It takes countless failures and major investment to bring any life-transforming drug to market, but there is another ingredient that is essential: a supportive government.”

In the case of coronavirus, the US government has shown a deep commitment to incentivize and expedite the clinical, approval and manufacturing process of any therapeutic with potential to attenuate the impact of the disease.

Another factor that makes the American life sciences ecosystem robust is the steady rise of emerging biotech over the past few decades as a powerful force for innovation. As a result of this phenomenon, more drugs are being discovered by smaller firms than ever before. This is evidenced by the increasing proportion of active INDs and new drug approvals (NDAs) attributed to smaller firms. This allows CROs and CDMOs to play an increasingly important role in expediting the process of bringing molecules to commercialization. Unlike big pharma, these smaller players rely heavily on collaboration and outsourcing. However, the explosion of emerging biotech companies happened largely as a result of big pharma outsourcing its early stage discovery and development to effectively de-risk, albeit at the expense of acquiring companies at a much later stage and richer valuation. “Many, if not all, of big biotech and big pharma companies realized there is an opportunity to shrink their internal R&D footprint and many of those companies still develop and discover drugs, but they do so in confined areas where they work broadly in an external world where they can build best in class partners to build in areas where they otherwise have a hard time building themselves,” said Michael Gladstone, a principal at Atlas Venture.

There are also numerous different modalities offered today that provide the R&D community and clinicians with a differentiated toolkit for being able to address different conditions. This gives companies the tools to tailor and refine how they think about making new medicines for specific conditions. CRISPR, messenger RNA, targeted protein degradation, microbiome and digital therapies are all tools that are now becoming more widely used.  (Insert Infograph3 Explosion of Modalities/Infograph 5-Vaccine Development Months from Viral genetic-sequence selection to first human study)

An example is that the gene-editing power of CRISPR technology is now being increasingly directed at fighting diseases, originally genetic ones, but more recently, it has been harnessed to fight infectious diseases, including the novel coronavirus. Multiple teams inside and outside of academia are working on using CRISPR for more effective tests. Mammoth Biosciences claims it has developed a test for Covid-19 that cuts the result time from several hours to less than 30 minutes. Sherlock Biosciences has produced a protocol that could work like a pregnancy test, giving a positive signal on a test strip. Although the engineering of cells once seemed to be science fiction, the most important measure of success is how these new modalities improve the lives of patients and, in 2020, the life sciences industry is better equipped than ever.

Covid-19 has thus far proven to be an unparalleled black swan event. However, no era passes without its share of defining moments. During this generationally challenging time, companies and entire industries have shown they are up to the task of tackling the public health crisis. By harnessing all the American energy, ingenuity and expertise in the life sciences and leaning on the country’s innate capacity to come together and solve big problems, the odds are good that a scientific breakthrough will occur that will resolve this crisis. This pandemic is a painful reminder that much of the work done in the life sciences industry has life and death consequences. It is critical that the industry continues on its growth path; lives will be saved as a result.


"There are hundreds of firms out there offering very specific services, and this will ultimately lead to more consolidation within the industry."
"Rather than merely facilitating tech transfers, we aspire to lead the innovation charge for our clients."
"Since the establishment of our facility in the US, we have felt the appreciation of the market in being able to have a local partner, especially in light of many companies trying to localize their supply chains."
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